If you are responsible for a space program, almost every element of it must be perfect. Nothing can go wrong with the rockets or the space suit. But if the astronauts’ chicken-noodle-soup-in-a-tube doesn’t quite taste like your grandmother’s recipe, it’s OK.
For every job, some things must be perfect while others don’t have to be. Not having to be perfect opens the door to more experiments, to more ideas. The more ideas you have, the more likely you are to have a good one. Good ideas are fun and exciting and give you a competitive advantage.
Look at what you are working on today. Does it have to be perfect? Can you let your team fail repeatedly until a good idea propels you forward? Do you have (and give) the psychological safety to make mistakes and learn and grow?
In other words, do you operate in a trusting environment?
According to this Forbes article, organizations with the highest level of employee engagement have a culture that mimic the greater marketplace: in these organizations, the best ideas win, no matter the status of the employee coming up with the idea.
In these organizations, employees are encouraged to speak up and diverse opinions are welcome. The venture is a form of adventure (pun intended). A sense of play permeates the workday. Failure is expected and embraced as a learning opportunity.
When employees work is an organization where they feel safe, seen, and heard, they are highly unlikely to engage in wrongdoing. Creating such a culture appears to be a win for both the business and the compliance communities.
With some people, you have to earn their trust at every turn. Things move slowly. Few risks are taken. Innovation is choked. These people get no mention in history books.
With others, their trust is yours to lose. Things happen fast. Ideas and failures abound. They rise to new heights and, sometimes, crash and burn. They change the world, for better or worse.
The key is to be both types at the right time, so that your people can innovate responsibly.
Bullying. Discrimination. Harassment.
Each behavior represents a failure to treat a fellow human being with respect.
In an attempt to rob someone of her dignity, the offender has willingly given his away.
“Strong regulation and supervision cannot substitute for deficiencies in bank culture.”
– William Dudley, President and CEO, New York Federal Reserve
We know that we can’t, and shouldn’t, have rules for everything.
We also know that internal controls send the message that we don’t trust our colleagues.
Of course, both are necessary but insufficient to address all organizational risks.
What’s left is an obligation for the ethical leader to create an ethical culture, to fill the gaps between rules and between controls.
It’s an obligation because the necessary power rests with leadership. Yet, too many leaders behave as if creating a good culture is optional.
Regulators don’t think it’s optional. Soon, failures to exercise this power will be seen as neglect. As negligence.
We all know where this is heading. One day, creating a good culture will be an organization’s first priority.
Why not take this obligation seriously now? Those who do it first will have a competitive advantage.
On this day in 1964, the murder of Kitty Genovese prompted scientific inquiries into what became known as the “bystander effect”.
The bystander effect is a phenomenon in which individuals are less likely to help a victim when other people are around. And the more witnesses, the less likely each is to help.
Perhaps the bystander effect was at play in recent workplace scandals. The abusive behaviors of celebrities, corporate moguls and politicians against their victims were witnessed by countless bystanders who did nothing.
It seems to me that bystanders are just another type of victims, unaware of the reasons behind their failure to act. These same people would help a victim if they were alone with him.
So maybe the next time we witness a person in need we should think of all the other witnesses not as bystanders but as victims in need of our help.
No bystanders, no bystander effect.
[If you haven’t done so already, I recommend you read my notes on Day 1 first]
My biggest insight on Day 2 came when a colleague asked “When do you stop looking for the root cause of a problem? Because if you keep asking “why?”, you’ll always end up at the same place: a failure of leadership.”
Perhaps there is one more “why?” after this cause. Why did leadership act this way or failed to act appropriately? The answer will point at the organization’s culture. It will highlight “who they really are”. And since culture is an outcome of processes – of “how things are really done around here” – we can then identify the process that needs to be changed.
In essence, every root cause analysis effort should aim to answer “What is it about our culture that allowed this failure to happen? And what processes are generating this culture?”
If we address these processes, we can start changing the culture.
The ECI Fellows are currently meeting to discuss root cause analysis (RCA) and how to apply it in the E&C function. Here are some of my notes from Day 1.
- The first question on the most recent FCPA guidelines that the DOJ issued to help its US Attorneys determine if an organization should be prosecuted is whether a RCA was conducted.
- Many organizations do not conduct RCA because they suffer from 4 common learning biases:
- Success bias: We prefer success over failure. When we fail, we don’t want to spend time on our failure.
- Action bias: We prefer to do rather than reflect. We are too busy to learn.
- Fitting-in bias: When we join an organization, we believe it’s best if we just fit in, so we don’t challenge how things are done.
- Expert bias: Rather than learn how best to do the work from those at the front lines, we tend to run to senior executives in the ivory tower or to external consultants.
To learn how to overcome these biases, see this HBR article from our presenter.
- Effective RCA usually requires an executive champion in the organization.
- 69% of legal violations resulting in public settlements between 2011 and 2013 can be attributed to cultural issues in the organization. Yet, most RCAs do not look at the cultural or behavioral aspects of the violations.
- When defining your problem statement before the RCA exercise, make sure it follows the MECE principle: Mutually Exclusive, Collectively Exhaustive.
The job of an ethics & compliance officer has peaks and valleys. Times when we love our job and days when we dread walking through the door.
For me, the low points are when I have too much on my plate. Not necessarily in the form of a single big project but rather when I have a few dozen minor initiatives going on all at the same time (on top of a big project!). With so many deadlines looming, I skip over details, I decline meetings I should attend, and my sense of humor goes south. In other words, I stop caring. I get in these situations because I allow good to be the enemy of the best. I say yes to projects with marginal benefits without weighing the opportunity cost. And when that cost manifests itself, it’s usually too late.
I find the greatest job satisfaction when I do less and care more. By “doing less”, I don’t mean a 4-hour work week. I mean having a curated selection of projects allowing me to be focused (AF). Never more than a handful, ideally two or three. By “caring”, I mean having the time to think about the impact I can create, to identify the best ideas to create that impact, to come up with a plan, to execute with focus, and to reflect on the outcome. Caring also means that people come first and that failure is seen as learning.
The next time you find yourself uninspired at work, check to see if perhaps you are caught up in second-tier activities. If so, prioritize your work to maximize your impact through activities you enjoy. You will feel the excitement. You will feel the energy.
You will care.
Few things are as disheartening to an ethics & compliance officer than to feel powerless against a senior management team who doesn’t walk the talk.
In an ideal world, the ECO could simply say to senior management “Wait. You say that X is important but you don’t put any resources into it. Either we admit that this is not important or we allocate the necessary resources.”
But we don’t live in an ideal world. So what are other actions an ECO can take? Here are some suggestions:
- Use a real case. Present the findings of a recent investigation to senior management. In a non-accusatory way, show how the organization could avoid another violation if more were to be done. Don’t blame them for their failure to act more aggressively in the past. Instead, present this as an opportunity to become better.
- Find an ally in the c-suite. If they don’t listen to you, they might listen to one of their own. Can you have a candid conversation with one of them, one you know could take the baton?
- Create demand. Discuss the issue of concern with as many middle managers as you can. Don’t point the finger at senior management. Instead, genuinely try to identify ways by which middle management can solve the issue on their own. Because a solution is unlikely, these sessions will agitate the crowd and senior management could be forced into action.
- Use the helpline. Force senior management to respond to your concern by using your anonymous helpline. You’ll want to make sure they can’t trace it back to you. You may not get a real answer, or you might get empty promises, but at least you will create a discussion in the c-suite and put them on notice that not everyone is fooled by talk that doesn’t match the walk.
You don’t have to be successful in any of these attempts. You simply need to keep trying.